Andrew Gavin Marshall Entering the Greatest Depression in History

More Bubbles Waiting to Burst by

Introduction While there is much talk of a recovery on the horizon, commentators are forgetting some crucial aspects of the financial crisis. The crisis is not simply composed of one bubble, the housing real estate bubble, which has already burst. The crisis has many bubbles, all of which dwarf the housing bubble burst of 2008. Indicators show that the next possible burst is the commercial real estate bubble. However, the main event on the horizon is the "bailout bubble" and the general world debt bubble, which will plunge the world into a Great Depression the likes of which have never before been seen. Housing Crash Still Not Over The housing real estate market, despite numbers indicating an upward trend, is still in trouble, as, "Houses are taking months to sell. Many buyers are having trouble getting financing as lenders and appraisers struggle to figure out what houses are really worth in the wake of the collapse." Further, "the overall market remains very soft [...] aside from speculators and first-time buyers." Dean Baker, co-director of the Center for Economic and Policy Research in Washington said, "It would be wrong to imagine that we have hit a turning point in the market," as "There is still an enormous oversupply of housing, which means that the direction of house prices will almost certainly continue to be downward." Foreclosures are still rising in many states "such as Nevada, Georgia and Utah, and economists say rising unemployment may push foreclosures higher into next year." Clearly, the housing crisis is still not at an end.[1] The Commercial Real Estate Bubble In May, Bloomberg quoted Deutsche Bank CEO Josef Ackermann as saying, "It's either the beginning of the end or the end of the beginning." Bloomberg further pointed out that, "A piece of the puzzle that must be calculated into any determination of the depth of our economic doldrums is the condition of commercial real estate -- the shopping malls, hotels, and office buildings that tend to go along with real- estate expansions." Residential investment went down 28.9 % from 2006 to 2007, and at the same time, nonresidential investment grew 24.9%, thus, commercial real estate was "serving as a buffer against the declining housing market." Commercial real estate lags behind housing trends, and so too, will the crisis, as "commercial construction projects are losing their appeal." Further, "there are lots of reasons to suspect that commercial real estate was subject to some of the loose lending practices that afflicted the residential market. The Office of the Comptroller of the Currency's Survey of Credit Underwriting Practices found that whereas in 2003 just 2 percent of banks were easing their underwriting standards on commercial construction

loans, by 2006 almost a third of them were relaxing." In May it was reported that, "Almost 80 percent of domestic banks are tightening their lending standards for commercial realestate loans," and that, "we may face double-bubble trouble for real estate and the economy."[2] In late July of 2009, it was reported that, "Commercial real estate's decline is a significant issue facing the economy because it may result in more losses for the financial industry than residential real estate. This category includes apartment buildings, hotels, office towers, and shopping malls." Worth noting is that, "As the economy has struggled, developers and landlords have had to rely on a helping hand from the US Federal Reserve in order to try to get credit flowing so that they can refinance existing buildings or even to complete partially constructed projects." So again, the Fed is delaying the inevitable by providing more liquidity to an already inflated bubble. As the Financial Post pointed out, "From Vancouver to Manhattan, we are seeing rising office vacancies and declines in office rents."[3] In April of 2009, it was reported that, "Office vacancies in U.S. downtowns increased to 12.5 percent in the first quarter, the highest in three years, as companies cut jobs and new buildings came onto the market," and, "Downtown office vacancies nationwide could come close to 15 percent by the end of this year, approaching the 10-year high of 15.5 percent in 2003."[4] In the same month it was reported that, "Strip malls, neighborhood centers and regional malls are losing stores at the fastest pace in at least a decade, as a spending slump forces retailers to trim down to stay afloat." In the first quarter of 2009, retail tenants "have vacated 8.7 million square feet of commercial space," which "exceeds the 8.6 million square feet of retail space that was vacated in all of 2008." Further, as CNN reported, "vacancy rates at malls rose 9.5% in the first quarter, outpacing the 8.9% vacancy rate registered in all of 2008." Of significance for those that think and claim the crisis will be over by 2010, "mall vacancies [are expected] to exceed historical levels through 2011," as for retailers, "it's only going to get worse."[5] Two days after the previous report, "General Growth Properties Inc, the second-largest U.S. mall owner, declared bankruptcy on [April 16] in the biggest real estate failure in U.S. history."[6] In April, the Financial Times reported that, "Property prices in China are likely to halve over the next two years, a top government researcher has predicted in a powerful signal that the country's economic downturn faces further challenges despite recent positive data." This is of enormous significance, as "The property market, along with exports, were leading drivers of the booming Chinese economy over the past decade." Further, "an apparent rebound in the property market was unsustainable over the medium term and being driven by a flood of liquidity and fraudulent activity rather than real demand." A researcher at a leading Chinese government think tank reported that, "he expected average urban residential property prices to fall by 40 to 50 per cent over the next two years from their levels at the end of 2008."[7] In April, it was reported that, "The Federal Reserve is considering offering longer loans to investors in commercial mortgage-backed securities as part of a plan to help jump-start the market for commercial real estate debt." Since February the Fed "has been analyzing appropriate terms and conditions for accepting commercial mortgage-backed securities (CMBS) and other mortgage assets as collateral for its Term Asset-Backed Securities Lending Facility (TALF)."[8]

In late July, the Financial Times reported that, "Two of America's biggest banks, Morgan Stanley and Wells Fargo ... threw into sharp relief the mounting woes of the US commercial property market when they reported large losses and surging bad loan," as "The disappointing second-quarter results for two of the largest lenders and investors in office, retail and industrial property across the US confirmed investors' fears that commercial real estate would be the next front in the financial crisis after the collapse of the housing market." The commercial property market, worth $6.7 trillion, "which accounts for more than 10 per cent of US gross domestic product, could be a significant hurdle on the road to recovery."[9] The Bailout Bubble While the bailout, or the "stimulus package" as it is often referred to, is getting good coverage in terms of being portrayed as having revived the economy and is leading the way to the light at the end of the tunnel, key factors are again misrepresented in this situation. At the end of March of 2009, Bloomberg reported that, "The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year." This amount "works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation's gross domestic product was $14.2 trillion in 2008."[10] Gerald Celente, the head of the Trends Research Institute, the major trend-forecasting agency in the world, wrote in May of 2009 of the "bailout bubble." Celente's forecasts are not to be taken lightly, as he accurately predicted the 1987 stock market crash, the fall of the Soviet Union, the 1998 Russian economic collapse, the 1997 East Asian economic crisis, the 2000 Dot-Com bubble burst, the 2001 recession, the start of a recession in 2007 and the housing market collapse of 2008, among other things. On May 13, 2009, Celente released a Trend Alert, reporting that, "The biggest financial bubble in history is being inflated in plain sight," and that, "This is the Mother of All Bubbles, and when it explodes [...] it will signal the end to the boom/bust cycle that has characterized economic activity throughout the developed world." Further, "This is much bigger than the Dot-com and Real Estate bubbles which hit speculators, investors and financiers the hardest. However destructive the effects of these busts on employment, savings and productivity, the Free Market Capitalist framework was left intact. But when the 'Bailout Bubble' explodes, the system goes with it." Celente further explained that, "Phantom dollars, printed out of thin air, backed by nothing ... and producing next to nothing ... defines the 'Bailout Bubble.' Just as with the other bubbles, so too will this one burst. But unlike Dot-com and Real Estate, when the "Bailout Bubble" pops, neither the President nor the Federal Reserve will have the fiscal fixes or monetary policies available to inflate another." Celente elaborated, "Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war," and that, "While we cannot pinpoint precisely when the 'Bailout Bubble' will burst, we are certain it will. When it does, it should be understood that a major war could follow."[11] However, this "bailout bubble" that Celente was referring to at the time was the $12.8 trillion reported by Bloomberg. As of July, estimates put this bubble at nearly double the previous estimate.

As the Financial Times reported in late July of 2009, while the Fed and Treasury hail the efforts and impact of the bailouts, "Neil Barofsky, special inspector-general for the troubled asset relief programme, [TARP] said that the various US schemes to shore up banks and restart lending exposed federal agencies to a risk of $23,700bn [$23.7 trillion] a vast estimate that was immediately dismissed by the Treasury." The inspector-general of the TARP program stated that there were "fundamental vulnerabilities...relating to conflicts of interest and collusion, transparency, performance measures, and anti-money laundering." Barofsky also reports on the "considerable stress" in commercial real estate, as "The Fed has begun to open up Talf to commercial mortgage-backed securities to try to influence credit conditions in the commercial real estate market. The report draws attention to a new potential credit crunch when $500bn worth of real estate mortgages need to be refinanced by the end of the year." Ben Bernanke, the Chairman of the Fed, and Timothy Geithner, the Treasury Secretary and former President of the New York Fed, are seriously discussing extending TALF (Term Asset-Backed Securities Lending Facility) into "CMBS [Commercial MortgageBacked Securities] and other assets such as small business loans and whether to increase the size of the programme." It is the "expansion of the various programmes into new and riskier asset classes is one of the main bones of contention between the Treasury and Mr Barofsky."[12] Testifying before Congress, Barofsky said, "From programs involving large capital infusions into hundreds of banks and other financial institutions, to a mortgage modification program designed to modify millions of mortgages, to public-private partnerships using tens of billions of taxpayer dollars to purchase 'toxic' assets from banks, TARP has evolved into a program of unprecedented scope, scale, and complexity." He explained that, "The total potential federal government support could reach up to 23.7 trillion dollars."[13] Is a Future Bailout Possible? In early July of 2009, billionaire investor Warren Buffet said that, "unemployment could hit 11 percent and a second stimulus package might be needed as the economy struggles to recover from recession," and he further stated that, "we're not in a recovery."[14] Also in early July, an economic adviser to President Obama stated that, "The United States should be planning for a possible second round of fiscal stimulus to further prop up the economy."[15] In August of 2009, it was reported that, "THE Obama administration will consider dishing out more money to rein in unemployment despite signs the recession is ending," and that, "Treasury secretary Tim Geithner also conceded tax hikes could be on the agenda as the government worked to bring its huge recovery-related deficits under control." Geithner said, "we will do what it takes," and that, "more federal cash could be tipped into the recovery as unemployment benefits amid projections the benefits extended to 1.5 million jobless Americans will expire without Congress' intervention." However, any future injection of money could be viewed as "a second stimulus package."[16] The Washington Post reported in early July of a Treasury Department initiative known as "Plan C." The Plan C team was assembled "to examine what could yet bring [the economy] down and has identified several trouble spots that could threaten the still-fragile lending industry," and "the internal project is focused on vexing problems such as the distressed commercial real estate markets, the high rate of delinquencies among homeowners, and the struggles of community and regional banks."

Further, "The team is also responsible for considering potential government responses, but top officials within the Obama administration are wary of rolling out initiatives that would commit massive amounts of federal resources." The article elaborated in saying that, "The creation of Plan C is a sign that the government has moved into a new phase of its response, acting preemptively rather than reacting to emerging crises." In particular, the near-term challenge they are facing is commercial real estate lending, as "Banks and other firms that provided such loans in the past have sharply curtailed lending," leaving "many developers and construction companies out in the cold." Within the next couple years, "these groups face a tidal wave of commercial real estate debt -- some estimates peg the total at more than $3 trillion -- that they will need to refinance. These loans were issued during this decade's construction boom with the mistaken expectation that they would be refinanced on the same generous terms after a few years." However, as a result of the credit crisis, "few developers can find anyone to refinance their debt, endangering healthy and distressed properties." Kim Diamond, a managing director at Standard & Poor's, stated that, "It's not a degree to which people are willing to lend," but rather, "The question is whether a loan can be made at all." Important to note is that, "Financial analysts said losses on commercial real estate loans are now the single largest cause of bank failures," and that none of the bailout efforts enacted "is big enough to address the size of the problem."[17] So the question must be asked: what is Plan C contemplating in terms of a possible government "solution"? Another bailout? The effect that this would have would be to further inflate the already monumental bailout bubble. The Great European Bubble In October of 2008, Germany and France led a European Union bailout of 1 trillion Euros, and "World markets initially soared as European governments pumped billions into crippled banks. Central banks in Europe also mounted a new offensive to restart lending by supplying unlimited amounts of dollars to commercial banks in a joint operation."[18] The American bailouts even went to European banks, as it was reported in March of 2009 that, "European banks declined to discuss a report that they were beneficiaries of the $173 billion bail-out of insurer AIG," as "Goldman Sachs, Morgan Stanley and a host of other U.S. and European banks had been paid roughly $50 billion since the Federal Reserve first extended aid to AIG." Among the European banks, "French banks Societe Generale and Calyon on Sunday declined to comment on the story, as did Deutsche Bank, Britain's Barclays and unlisted Dutch group Rabobank." Other banks that got money from the US bailout include HSBC, Wachovia, Merrill Lynch, Banco Santander and Royal Bank of Scotland. Because AIG was essentially insolvent, "the bailout enabled AIG to pay its counterparty banks for extra collateral," with "Goldman Sachs and Deutsche bank each receiving $6 billion in payments between mid-September and December."[19] In April of 2009, it was reported that, "EU governments have committed 3 trillion Euros [or $4 trillion dollars] to bail out banks with guarantees or cash injections in the wake of the global financial crisis, the European Commission."[20] In early February of 2009, the Telegraph published a story with a startling headline, "European banks may need 16.3 trillion pound bail-out, EC document warns." Type this

headline into google, and the link to the Telegraph appears. However, click on the link, and the title has changed to "European bank bail-out could push EU into crisis." Further, they removed any mention of the amount of money that may be required for a bank bailout. The amount in dollars, however, nears $25 trillion. The amount is the cumulative total of the troubled assets on bank balance sheets, a staggering number derived from the derivatives trade. The Telegraph reported that, "National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors - particularly those who lend money to European governments - have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back."[21] When Eastern European countries were in desperate need of financial aid, and discussion was heated on the possibility of an EU bailout of Eastern Europe, the EU, at the behest of Angela Merkel of Germany, denied the East European bailout. However, this was more a public relations stunt than an actual policy position. While the EU refused money to Eastern Europe in the form of a bailout, in late March European leaders "doubled the emergency funding for the fragile economies of central and eastern Europe and pledged to deliver another doubling of International Monetary Fund lending facilities by putting up 75bn Euros (70bn pounds)." EU leaders "agreed to increase funding for balance of payments support available for mainly eastern European member states from 25bn Euros to 50bn Euros."[22] As explained in a Times article in June of 2009, Germany has been deceitful in its public stance versus its actual policy decisions. The article, worth quoting in large part, first explained that: Europe is now in the middle of a perfect storm - a confluence of three separate, but interconnected economic crises which threaten far greater devastation than Britain or America have suffered from the credit crunch: the collapse of German industry and employment, the impending bankruptcy of Central European homeowners and businesses; and the threat of government debt defaults from loss of monetary control by the Irish Republic, Greece and Portugal, for instance on the eurozone periphery. Taking the case of Latvia, the author asks, "If the crisis expands, other EU governments - and especially Germany's - will face an existential question. Do they commit hundreds of billions of euros to guarantee the debts of fellow EU countries? Or do they allow government defaults and devaluations that may ultimately break up the single currency and further cripple German industry, as well as the country's domestic banks?" While addressing that, "Publicly, German politicians have insisted that any bailouts or guarantees are out of the question," however, "the pass has been quietly sold in Brussels, while politicians loudly protested their unshakeable commitment to defend it." The author addressed how in October of 2008: [...] a previously unused regulation was discovered, allowing the creation of a 25 billion Euros "balance of payments facility" and authorising the EU to borrow substantial sums under its own "legal personality" for the first time. This facility was doubled again to 50 billion Euros in March. If Latvia's

financial problems turn into a full-scale crisis, these guarantees and crosssubsidies between EU governments will increase to hundreds of billions in the months ahead and will certainly mutate into large-scale centralised EU borrowing, jointly guaranteed by all the taxpayers of the EU. [...] The new EU borrowing, for example, is legally an 'off-budget' and 'backto-back' arrangement, which allows Germany to maintain the legal fiction that it is not guaranteeing the debts of Latvia et al. The EU's bond prospectus to investors, however, makes quite clear where the financial burden truly lies: "From an investor's point of view the bond is fully guaranteed by the EU budget and, ultimately, by the EU Member States."[23] So Eastern Europe is getting, or presumably will get bailed out. Whether this is in the form of EU federalism, providing loans of its own accord, paid for by European taxpayers, or through the IMF, which will attach any loans with its stringent Structural Adjustment Program (SAP) conditionalities, or both. It turned out that the joint partnership of the IMF and EU is what provided the loans and continues to provide such loans. As the Financial Times pointed out in August of 2009, "Bank failures or plunging currencies in the three Baltic nations Latvia, Lithuania and Estonia could threaten the fragile prospect of recovery in the rest of Europe. These countries also sit on one of the world's most sensitive political fault-lines. They are the European Union's frontier states, bordering Russia." In July, Latvia "agreed its second loan in eight months from the IMF and the EU," following the first one in December. Lithuania is reported to be following suit. However, as the Financial Times noted, the loans came with the IMF conditionalities: "The injection of cash is the good news. The bad news is that, in return for shoring up state finances, the new IMF deal will require the Latvian government to impose yet more pain on its suffering population. Public-sector wages have already been cut by about a third this year. Pensions have been sliced. Now the IMF requires Latvia to cut another 10 per cent from the state budget this autumn."[24] If we are to believe the brief Telegraph report pertaining to nearly $25 trillion in bad bank assets, which was removed from the original article for undisclosed reasons, not citing a factual retraction, the question is, does this potential bailout still stand? These banks haven't been rescued financially from the EU, so, presumably, these bad assets are still sitting on the bank balance sheets. This bubble has yet to blow. Combine this with the $23.7 trillion US bailout bubble, and there is nearly $50 trillion between the EU and the US waiting to burst. An Oil Bubble In early July of 2009, the New York Times reported that, "The extreme volatility that has gripped oil markets for the last 18 months has shown no signs of slowing down, with oil prices more than doubling since the beginning of the year despite an exceptionally weak economy." Instability in the oil and gas prices has led many to "fear it could jeopardize a global recovery." Further, "It is also hobbling businesses and consumers," as "A wild run on the oil markets has occurred in the last 12 months." Oil prices reached a record high last summer at $145/barrel, and with the economic crisis they fell to $33/barrel in December. However, since the start of 2009, oil has risen 55% to $70/barrel. As the Times article points out, "the recent rise in oil prices is reprising the debate from last year over the role of investors or speculators in the commodity markets." Energy

officials from the EU and OPEC met in June and concluded that, "the speculation issue had not been resolved yet and that the 2008 bubble could be repeated."[25] In June of 2009, Hedge Fund manager Michael Masters told the US Senate that, "Congress has not done enough to curb excessive speculation in the oil markets, leaving the country vulnerable to another price run-up in 2009." He explained that, "oil prices are largely not determined by supply and demand but the trading desks of large Wall Street firms." Because "Nothing was actually done by Congress to put an end to the problem of excessive speculation" in 2008, Masters explained, "there is nothing to prevent another bubble in oil prices in 2009. In fact, signs of another possible bubble are already beginning to appear."[26] In May of 2008, Goldman Sachs warned that oil could reach as much as $200/barrel within the next 12-24 months [up to May 2010]. Interestingly, "Goldman Sachs is one of the largest Wall Street investment banks trading oil and it could profit from an increase in prices."[27] However, this is missing the key point. Not only would Goldman Sachs profit, but Goldman Sachs plays a major role in sending oil prices up in the first place. As Ed Wallace pointed out in an article in Business Week in May of 2008, Goldman Sachs' report placed the blame for such price hikes on "soaring demand" from China and the Middle East, combined with the contention that the Middle East has or would soon peak in its oil reserves. Wallace pointed out that: Goldman Sachs was one of the founding partners of online commodities and futures marketplace Intercontinental Exchange (ICE). And ICE has been a primary focus of recent congressional investigations; it was named both in the Senate's Permanent Subcommittee on Investigations' June 27, 2006, Staff Report and in the House Committee on Energy & Commerce's hearing last December. Those investigations looked into the unregulated trading in energy futures, and both concluded that energy prices' climb to stratospheric heights has been driven by the billions of dollars' worth of oil and natural gas futures contracts being placed on the ICEwhich is not regulated by the Commodities Futures Trading Commission.[28] Essentially, Goldman Sachs is one of the key speculators in the oil market, and thus, plays a major role in driving oil prices up on speculation. This must be reconsidered in light of the resurgent rise in oil prices in 2009. In July of 2009, "Goldman Sachs Group Inc. posted record earnings as revenue from trading and stock underwriting reached all-time highs less than a year after the firm took $10 billion in U.S. rescue funds."[29] Could one be related to the other? Bailouts Used in Speculation In November of 2008, the Chinese government injected an "$849 billion stimulus package aimed at keeping the emerging economic superpower growing."[30] China then recorded a rebound in the growth rate of the economy, and underwent a stock market boom. However, as the Wall Street Journal pointed out in July of 2009, "Its growth is now fuelled by cheap debt rather than corporate profits and retained earnings, and this shift in the medium term threatens to undermine China's economic decoupling from the global slump." Further, "overseas money has been piling into China, inflating foreign exchange reserves and domestic liquidity. So perhaps it is not surprising that outstanding bank loans have doubled in the last few years, or that there is much talk of a shadow banking system. Then there is China's reputation for

building overcapacity in its industrial sector, a notoriety it won even before the crash in global demand. This showed a disregard for returns that is always a tell-tale sign of cheap money." China's economy primarily relies upon the United States as a consumption market for its cheap products. However, "The slowdown in U.S. consumption amid a credit crunch has exposed the weaknesses in this export-led financing model. So now China is turning instead to cheap debt for funding, a shift suggested by this year's 35% or so rise in bank loans."[31] In August of 2009, it was reported that China is experiencing a "stimulus-fueled stock market boom." However, this has caused many leaders to "worry that too much of the $1-trillion lending binge by state banks that paid for China's nascent revival was diverted into stocks and real estate, raising the danger of a boom and bust cycle and higher inflation less than two years after an earlier stock market bubble burst."[32] The same reasoning needs to be applied to the US stock market surge. Something is inherently and structurally wrong with a financial system in which nothing is being produced, 600,000 jobs are lost monthly, and yet, the stock market goes up. Why is the stock market going up? The Troubled Asset Relief Program (TARP), which provided $700 billion in bank bailouts, started under Bush and expanded under Obama, entails that the US Treasury purchases $700 billion worth of "troubled assets" from banks, and in turn, "that banks cannot be asked to account for their use of taxpayer money."[33] So if banks don't have to account for where the money goes, where did it go? They claim it went back into lending. However, bank lending continues to go down.[34] Stock market speculation is the likely answer. Why else would stocks go up, lending continue downwards, and the bailout money be unaccounted for? What Does the Bank for International Settlements (BIS) Have to Say? In late June, the Bank for International Settlements (BIS), the central bank of the world's central banks, the most prestigious and powerful financial organization in the world, delivered an important warning. It stated that, "fiscal stimulus packages may provide no more than a temporary boost to growth, and be followed by an extended period of economic stagnation." The BIS, "The only international body to correctly predict the financial crisis ... has warned the biggest risk is that governments might be forced by world bond investors to abandon their stimulus packages, and instead slash spending while lifting taxes and interest rates," as the annual report of the BIS "has for the past three years been warning of the dangers of a repeat of the depression." Further, "Its latest annual report warned that countries such as Australia faced the possibility of a run on the currency, which would force interest rates to rise." The BIS warned that, "a temporary respite may make it more difficult for authorities to take the actions that are necessary, if unpopular, to restore the health of the financial system, and may thus ultimately prolong the period of slow growth." Of immense import is the BIS warning that, "At the same time, government guarantees and asset insurance have exposed taxpayers to potentially large losses," and explaining how fiscal packages posed significant risks, it said that, "There is a danger that fiscal policy-makers will exhaust their debt capacity before finishing the costly job of repairing the financial system," and that, "There is the definite possibility that stimulus programs will drive up real interest

rates and inflation expectations." Inflation "would intensify as the downturn abated," and the BIS "expressed doubt about the bank rescue package adopted in the US."[35] The BIS further warned of inflation, saying that, "The big and justifiable worry is that, before it can be reversed, the dramatic easing in monetary policy will translate into growth in the broader monetary and credit aggregates," the BIS said. That will "lead to inflation that feeds inflation expectations or it may fuel yet another asset-price bubble, sowing the seeds of the next financial boom-bust cycle."[36] Major investors have also been warning about the dangers of inflation. Legendary investor Jim Rogers has warned of "a massive inflation holocaust."[37] Investor Marc Faber has warned that, "The U.S. economy will enter 'hyperinflation' approaching the levels in Zimbabwe," and he stated that he is "100 percent sure that the U.S. will go into hyperinflation." Further, "The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."[38] Are We Entering A New Great Depression? In 2007, it was reported that, "The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood." Further: The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system. [....] In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be "cleaned up" afterwards - which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.[39] In 2008, the BIS again warned of the potential of another Great Depression, as "complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.."[40] In 2008, the BIS also said that, "The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the US, compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point," and that all central banks have done "has been to put off the day of reckoning."[41] In late June of 2009, the BIS reported that as a result of stimulus packages, it has only seen "limited progress" and that, "the prospects for growth are at risk," and further "stimulus measures won't be able to gain traction, and may only lead to a temporary pickup in growth." Ultimately, "A fleeting recovery could well make matters worse."[42]

The BIS has said, in softened language, that the stimulus packages are ultimately going to cause more damage than they prevented, simply delaying the inevitable and making the inevitable that much worse. Given the previous BIS warnings of a Great Depression, the stimulus packages around the world have simply delayed the coming depression, and by adding significant numbers to the massive debt bubbles of the world's nations, will ultimately make the depression worse than had governments not injected massive amounts of money into the economy. After the last Great Depression, Keynesian economists emerged victorious in proposing that a nation must spend its way out of crisis. This time around, they will be proven wrong. The world is a very different place now. Loose credit, easy spending and massive debt is what has led the world to the current economic crisis, spending is not the way out. The world has been functioning on a debt based global economy. This debt based monetary system, controlled and operated by the global central banking system, of which the apex is the Bank for International Settlements, is unsustainable. This is the real bubble, the debt bubble. When it bursts, and it will burst, the world will enter into the Greatest Depression in world history. Notes
[1] Barrie McKenna, End of housing slump? Try telling that to buyers, sellers and the unemployed. The Globe and Mail: August 6, 2009: http://www.theglobeandmail.com/report-on-business/end-of-housing-slump-try-telling-that-to-buyers-sellersand-the-unemployed/article1240418/ [2] Gene Sperling, Double-Bubble Trouble in Commercial Real Estate: Gene Sperling. Bloomberg: May 9, 2009: http://www.bloomberg.com/apps/news?pid=20601110&sid=a.X91SkgOd8g [3] AL Sull, Commercial Real Estate - The Other Real Estate Bubble. Financial Post: July 23, 2009: http://network.nationalpost.com/np/blogs/fpmagazinedaily/archive/2009/07/23/commercial-real-estate-the-otherreal-estate-bubble.aspx [4] Hui-yong Yu, U.S.. Office Vacancies Rise to Three-Year High, Cushman Says. Bloomberg: April 16, 2009: http://www.bloomberg.com/apps/news?pid=20601087&sid=aegH6dXG8H8U [5] Parija B. Kavilanz, Malls shedding stores at record pace. CNN Money: April 14, 2009: http://money.cnn.com/2009/04/10/news/economy/retail_malls/index.htm [6] Ilaina Jonas and Emily Chasan, General Growth files largest U.S. real estate bankruptcy. Reuters: April 16, 2009: http://www.reuters.com/article/businessNews/idUSTRE53F68P20090417 [7] Jamil Anderlini, China property prices 'likely to halve'. The Financial Times: April 13, 2009: http://www.ft.com/cms/s/0/9a36b342-280e-11de-8dbf-00144feabdc0.html [8] Reuters, Fed Might Extend TALF Support to Five Years. Money News: April 17, 2009: http://moneynews.newsmax.com/financenews/talf/2009/04/17/204120.html?utm_medium=RSS

[9] Francesco Guerrera and Greg Farrell, US banks warn on commercial property. The Financial Times: July 22, 2009: http://www.ft.com/cms/s/0/3a1e9d86-76eb-11de-b23c-00144feabdc0.html [10] Mark Pittman and Bob Ivry, Financial Rescue Nears GDP as Pledges Top $12.8 Trillion. Bloomberg: March 31, 2009: http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4 [11] Gerald Celente, The "Bailout Bubble" - The Bubble to End All Bubbles. Trends Research Institute: May 13, 2009: http://geraldcelentechannel.blogspot.com/2009/05/gerald-celente-bubble-to-end-all.html [12] Tom Braithwaite, Treasury clashes with Tarp watchdog on data. The Financial Times: July 20, 2009: http://www.ft.com/cms/s/0/ab533a38-757a-11de-9ed5-00144feabdc0.html [13] AFP, US could spend 23.7 trillion dollars on crisis: report. Agence-France Presse: July 20, 2009: http://www.google.com/hostednews/afp/article/ALeqM5iuL1HParBuO4WyHJIxw6rlOKdz-A [14] John Whitesides, Warren Buffett says second stimulus might be needed. Reuters: July 9, 2009: http://www.reuters.com/article/pressReleasesMolt/idUSTRE5683MZ20090709 [15] Vidya Ranganathan, U.S. should plan 2nd fiscal stimulus: economic adviser. Reuters: July 7, 2009: http://www.reuters.com/article/newsOne/idUSTRE56611D20090707 [16] Carly Crawford, US may increase stimulus payments to rein in unemployment. The Herald Sun: August 3, 2009: http://www.news.com.au/heraldsun/story/0,21985,25873672-664,00.html [17] David Cho and Binyamin Appelbaum, Treasury Works on 'Plan C' To Fend Off Lingering Threats. The Washington Post: July 8, 2009: http://www.washingtonpost..com/wp-dyn/content/article/2009/07/07/AR2009070702631.html?hpid=topnews [18] Charles Bremner and David Charter, Germany and France lead 1 trillion European bailout. Times Online: October 13, 2009: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4937516.ece [19] Douwe Miedema, Europe banks silent on reported AIG bailout gains. Reuters: March 8, 2009: http://www.reuters.com/article/topNews/idUSTRE5270YD20090308 [20] Elitsa Vucheva, European Bank Bailout Total: $4 Trillion. Business Week: April 10, 2009: http://www.businessweek.com/globalbiz/content/apr2009/gb20090410_254738.htm? chan=globalbiz_europe+index+page_top+stories [21] Bruno Waterfield, European bank bail-out could push EU into crisis. The Telegraph: February 11, 2009: http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3trillion-bail-out-EC-dcoument-warns.html [22] Ian Traynor, EU doubles funding for fragile eastern European economies. The Guardian: March 20, 2009: http://www.guardian.co.uk/world/2009/mar/20/eu-imf-emergency-funding

[23] Anatole Kaletsky, The great bailout - Europe's best-kept secret. The Times Online: June 4, 2009: http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article6426565.ece [24] Gideon Rachman, Europe prepares for a Baltic blast. The Financial Times: August 3, 2009: http://www.ft.com/cms/s/0/b497f5b6-8060-11de-bf04-00144feabdc0.html [25] JAD MOUAWAD, Swings in Price of Oil Hobble Forecasting. The New York Times: July 5, 2009: http://www.nytimes.com/2009/07/06/business/06oil.html [26] Christopher Doering, Masters says signs of oil bubble starting to appear. Reuters: June 4, 2009: http://www.reuters.com/article/Inspiration/idUSTRE55355620090604 [27] Javier Blas and Chris Flood, Analyst warns of oil at $200 a barrel. The Financial Times: May 6, 2008: http://us.ft.com/ftgateway/superpage.ft?news_id=fto050620081414392593 [28] Ed Wallace, The Reason for High Oil Prices. Business Week: May 13, 2009: http://www.businessweek.com/lifestyle/content/may2008/bw20080513_720178.htm [29] Christine Harper, Goldman Sachs Posts Record Profit, Beating Estimates. Bloomberg: July 14, 2009: http://www.bloomberg.com/apps/news?pid=20601087&sid=a2jo3RK2_Aps [30] Peter Martin and John Garnaut, The great China bailout. The Age: November 11, 2008: http://business.theage.com.au/business/the-great-china-bailout-20081110-5lpe.html [31] Paul Cavey, Now China Has a Credit Boom. The Wall Street Journal: July 30, 2009: http://online.wsj.com/article/SB10001424052970204619004574319261337617196.html [32] Joe McDonald, China's stimulus-fueled stock boom alarms Beijing. The Globe and Mail: August 2, 2009: http://www.globeinvestor.com/servlet/story/RTGAM.20090802.wchina02/GIStory/ [33] Matt Jaffe, Watchdog Refutes Treasury Claim Banks Cannot Be Asked to Account for Bailout Cash. ABC News: July 19, 2009: http://abcnews.go.com/Business/Politics/story?id=8121045&page=1 [34] The China Post, Bank lending slows down in U.S.: report. The China Post: July 28, 2009: http://www.chinapost.com.tw/business/americas/2009/07/28/218141/Bank-lending.htm [35] David Uren. Bank for International Settlements warning over stimulus benefits. The Australian: June 30, 2009: http://www.theaustralian.news.com.au/story/0,,25710566-601,00.html [36] Simone Meier, BIS Sees Risk Central Banks Will Raise Interest Rates Too Late. Bloomberg: June 29, 2009: http://www.bloomberg.com/apps/news?pid=20601068&sid=aOnSy9jXFKaY [37] CNBC.com, We Are Facing an 'Inflation Holocaust': Jim Rogers. CNBC: October 10, 2008: http://www.cnbc.com/id/27097823

[38] Chen Shiyin and Bernard Lo, U.S. Inflation to Approach Zimbabwe Level, Faber Says. Bloomberg: May 27, 2009: http://www.bloomberg.com/apps/news?pid=20601110&sid=avgZDYM6mTFA [39] Ambrose Evans-Pritchard, BIS warns of Great Depression dangers from credit spree. The Telegraph: June 27, 2009: http://www.telegraph.co.uk/finance/economics/2811081/BIS-warns-of-Great-Depression-dangers-from-creditspree.html [40] Gill Montia, Central bank body warns of Great Depression. Banking Times: June 9, 2008: http://www.bankingtimes.co.uk/09062008-central-bank-body-warns-of-great-depression/ [41] Ambrose Evans-Pritchard, BIS slams central banks, warns of worse crunch to come. The Telegraph: June 30, 2008: http://www.telegraph.co.uk/finance/markets/2792450/BIS-slams-central-banks-warns-of-worse-crunch-tocome.html [42] HEATHER SCOFFIELD, Financial repairs must continue: central banks. The Globe and Mail: June 29, 2009: http://v1.theglobeandmail.com/servlet/story/RTGAM.20090629.wcentralbanks0629/BNStory/HEATHER+SCO FFIELD/

Andrew Gavin Marshall is a Research Associate with the Centre for Research on Globalization (CRG). He is currently studying Political Economy and History at Simon Fraser University. This is Part 2 of the Series, "The Origins of World War III" Part 1: An Imperial Strategy for a New World Order: The Origins of World War III Introduction Following US geo-strategy in what Brzezinski termed the global Balkans, the US government has worked closely with major NGOs to promote democracy and freedom in former Soviet republics, playing a role behind the scenes in fomenting what are termed colour revolutions, which install US and Western-friendly puppet leaders to advance the interests of the West, both economically and strategically. Part 2 of this essay on The Origins of World War III analyzes the colour revolutions as being a key stratagem in imposing the US-led New World Order. The colour revolution or soft revolution strategy is a covert political tactic of expanding NATO and US influence to the borders of Russia and even China; following in line with one of the primary aims of

US strategy in the New World Order: to contain China and Russia and prevent the rise of any challenge to US power in the region. These revolutions are portrayed in the western media as popular democratic revolutions, in which the people of these respective nations demand democratic accountability and governance from their despotic leaders and archaic political systems. However, the reality is far from what this utopian imagery suggests. Western NGOs and media heavily finance and organize opposition groups and protest movements, and in the midst of an election, create a public perception of vote fraud in order to mobilize the mass protest movements to demand their candidate be put into power. It just so happens that their candidate is always the Western USfavoured candidate, whose campaign is often heavily financed by Washington; and who proposes US-friendly policies and neoliberal economic conditions. In the end, it is the people who lose out, as their genuine hope for change and accountability is denied by the influence the US wields over their political leaders. The soft revolutions also have the effect of antagonizing China and Russia, specifically, as it places US protectorates on their borders, and drives many of the former Warsaw Pact nations to seek closer political, economic and military cooperation. This then exacerbates tensions between the west and China and Russia; which ultimately leads the world closer to a potential conflict between the two blocs. Serbia Serbia experienced its colour revolution in October of 2000, which led to the overthrow of Serbian leader Slobodan Milosevic. As the Washington Post reported in December of 2000, from 1999 on, the US undertook a major electoral strategy to oust Milosevic, as U.S.-funded consultants played a crucial role behind the scenes in virtually every facet of the antiMilosevic drive, running tracking polls, training thousands of opposition activists and helping to organize a vitally important parallel vote count. U.S. taxpayers paid for 5,000 cans of spray paint used by student activists to scrawl anti-Milosevic graffiti on walls across Serbia, and 2.5 million stickers with the slogan "He's Finished," which became the revolution's catchphrase. Further, according to Michael Dobbs,writing in the Washington Post, some 20 opposition leaders accepted an invitation from the Washington-based National Democratic Institute (NDI) in October 1999 to a seminar at the Marriott Hotel in Budapest. Interestingly, Some Americans involved in the anti-Milosevic effort said they were aware of CIA activity at the fringes of the campaign, but had trouble finding out what the agency was up to. Whatever it was, they concluded it was not particularly effective. The lead role was taken by the State Department and the U.S. Agency for International Development, the government's foreign assistance agency, which channeled the funds

through commercial contractors and nonprofit groups such as NDI and its Republican counterpart, the International Republican Institute (IRI). The NDI (National Democratic Institute), worked closely with Serbian opposition parties, IRI focused its attention on Otpor, which served as the revolution's ideological and organizational backbone. In March, IRI paid for two dozen Otpor leaders to attend a seminar on nonviolent resistance at the Hilton Hotel in Budapest. At the seminar, the Serbian students received training in such matters as how to organize a strike, how to communicate with symbols, how to overcome fear and how to undermine the authority of a dictatorial regime.[1] As the New York Times revealed, Otpor, the major student opposition group, had a steady flow of money coming from the National Endowment for Democracy (NED), a Congress-funded democracy promoting organization. The United States Agency for International Development (USAID) gave money to Otpor, as did the International Republican Institute, another nongovernmental Washington group financed partly by A.I.D.[2] Georgia In 2003, Georgia went through its Rose Revolution, which led to the overthrow of president Eduard Shevardnadze, replacing him with Mikhail Saakashvili after the 2004 elections. In a November 2003 article in The Globe and Mail, it was reported that a US based foundation began laying the brickwork for the toppling of Georgian President Eduard Shevardnadze, as funds from his non-profit organization sent a 31-yearold Tbilisi activist named Giga Bokeria to Serbia to meet with members of the Otpor (Resistance) movement and learn how they used street demonstrations to topple dictator Slobodan Milosevic. Then, in the summer, the foundation paid for a return trip to Georgia by Otpor activists, who ran three-day courses teaching more than 1,000 students how to stage a peaceful revolution. This US-based foundation also funded a popular opposition television station that was crucial in mobilizing support for [the] velvet revolution, and [it] reportedly gave financial support to a youth group that led the street protests. The owner of the foundation has a warm relationship with Mr. Shevardnadze's chief opponent, Mikhail Saakashvili, a New Yorkeducated lawyer who is expected to win the presidency in an election scheduled for Jan. 4. During a press conference a week before his resignation, Mr. Shevardnadze said that the US foundation is set against the President of Georgia. Moreover, Mr. Bokeria, whose Liberty Institute received money from both [the financiers foundation] and the U.S. government-backed Eurasia Institute, says three other organizations played key roles in Mr.

Shevardnadze's downfall: Mr. Saakashvili's National Movement party, the Rustavi-2 television station and Kmara! (Georgian for Enough!), a youth group that declared war on Mr. Shevardnadze [in] April and began a poster and graffiti campaign attacking government corruption. [3] The day following the publication of the previously quoted article, the author published another article in the Globe and Mail explaining that the bloodless revolution in Georgia smells more like another victory for the United States over Russia in the post-Cold War international chess game. The author, Mark MacKinnon, explained that Eduard Shevardnadzes downfall lied in the oil under the Caspian Sea, one of the world's few great remaining, relatively unexploited, sources of oil, as Georgia and neighbouring Azerbaijan, which borders the Caspian, quickly came to be seen not just as newly independent countries, but as part of an energy corridor. Plans were drawn up for a massive pipeline that would run through Georgia to Turkey and the Mediterranean. It is worth quoting MacKinnon at length: When these plans were made, Mr. Shevardnadze was seen as an asset by both Western investors and the U.S. government. His reputation as the man who helped end the Cold War gave investors a sense of confidence in the country, and his stated intention to move Georgia out of Russia's orbit and into Western institutions such as the North Atlantic Treaty Organization and the European Union played well at the U.S. State Department. The United States quickly moved to embrace Georgia, opening a military base in the country [in 2001] to give Georgian soldiers "anti-terrorist" training. They were the first U.S. troops to set up in a former Soviet republic. But somewhere along the line, Mr. Shevardnadze reversed course and decided to once more embrace Russia. This summer, Georgia signed a secret 25-year deal to make the Russian energy giant Gazprom its sole supplier of gas. Then it effectively sold the electricity grid to another Russian firm, cutting out AES, the company that the U.S. administration had backed to win the deal. Mr. Shevardnadze attacked AES as "liars and cheats." Both deals dramatically increased Russian influence in Tbilisi. Following the elections in Georgia, the US-backed and educated Mikhail Saakashvili ascended to the Presidency and won the day.[4] This is again an example of the intimate relationship between oil geopolitics and US foreign policy. The colour revolution was vital in pressing US and NATO interests forward in the region; gaining control over Central Asias gas reserves and keeping Russia from expanding its influence. This follows

directly in line with the US-NATO imperial strategy for the new world order, following the collapse of the USSR. [This strategy is outlined in detail in Part 1 of this essay: An Imperial Strategy for a New World Order: The Origins of World War III]. Ukraine In 2004, Ukraine went through its Orange Revolution, in which opposition and pro-Western leader Viktor Yushchenko became President, defeating Viktor Yanukovych. As the Guardian revealed in 2004, that following the disputed elections (as happens in every colour revolution), the democracy guerrillas of the Ukrainian Pora youth movement have already notched up a famous victory - whatever the outcome of the dangerous stand-off in Kiev, however, the campaign is an American creation, a sophisticated and brilliantly conceived exercise in western branding and mass marketing that, in four countries in four years, has been used to try to salvage rigged elections and topple unsavoury regimes. The author, Ian Traynor, explained that, Funded and organised by the US government, deploying US consultancies, pollsters, diplomats, the two big American parties and US non-government organisations, the campaign was first used in Europe in Belgrade in 2000 to beat Slobodan Milosevic at the ballot box. Further, The Democratic party's National Democratic Institute, the Republican party's International Republican Institute, the US state department and USAid are the main agencies involved in these grassroots campaigns as well as the Freedom House NGO and the same billionaire financier involved in Georgias Rose Revolution. In implementing the regime-change strategy, The usually fractious oppositions have to be united behind a single candidate if there is to be any chance of unseating the regime. That leader is selected on pragmatic and objective grounds, even if he or she is anti-American. Traynor continues: Freedom House and the Democratic party's NDI helped fund and organise the "largest civil regional election monitoring effort" in Ukraine, involving more than 1,000 trained observers. They also organised exit polls. On Sunday night those polls gave Mr Yushchenko an 11-point lead and set the agenda for much of what has followed. The exit polls are seen as critical because they seize the initiative in the propaganda battle with the regime, invariably appearing first, receiving wide media coverage and putting the onus on the authorities to respond.

The final stage in the US template concerns how to react when the incumbent tries to steal a lost election. [. . . ] In Belgrade, Tbilisi, and now Kiev, where the authorities initially tried to cling to power, the advice was to stay cool but determined and to organise mass displays of civil disobedience, which must remain peaceful but risk provoking the regime into violent suppression.[5] As an article in the Guardian by Jonathan Steele explained, the opposition leader, Viktor Yushchenko, who disputed the election results, served as prime minister under the outgoing president, Leonid Kuchma, and some of his backers are also linked to the brutal industrial clans who manipulated Ukraine's post-Soviet privatization. He further explained that election rigging is mainly irrelevant, as The decision to protest appears to depend mainly on realpolitik and whether the challengers or the incumbent are considered more pro-western or pro-market. In other words, those who support a neoliberal economic agenda will have the support of the USNATO, as neoliberalism is their established international economic order and advances their interests in the region. Moreover, In Ukraine, Yushchenko got the western nod, and floods of money poured in to groups which support him, ranging from the youth organisation, Pora, to various opposition websites. More provocatively, the US and other western embassies paid for exit polls. This is emblematic of the strategic importance of the Ukraine to the United States, which refuses to abandon its cold war policy of encircling Russia and seeking to pull every former Soviet republic to its side.[6] One Guardian commentator pointed out the hypocrisy of western media coverage: Two million anti-war demonstrators can stream though the streets of London and be politically ignored, but a few tens of thousands in central Kiev are proclaimed to be the people, while the Ukrainian police, courts and governmental institutions are discounted as instruments of oppression. It was also explained that, Enormous rallies have been held in Kiev in support of the prime minister, Viktor Yanukovich, but they are not shown on our TV screens: if their existence is admitted, Yanukovich supporters are denigrated as having been bussed in. The demonstrations in favour of Viktor Yushchenko have laser lights, plasma screens, sophisticated sound systems, rock concerts, tents to camp in and huge quantities of orange clothing; yet we happily dupe ourselves that they are spontaneous.[7] In 2004, the Associated Press reported that, The Bush administration has spent more than $65 million in the past two years to aid political organizations in Ukraine, paying to bring opposition leader Viktor Yushchenko to meet U.S. leaders and helping to underwrite an exit poll indicating he won last month's disputed runoff election. The money,

they state, was funneled through organizations such as the Eurasia Foundation or through groups aligned with Republicans and Democrats that organized election training, with human rights forums or with independent news outlets. However, even government officials acknowledge that some of the money helped train groups and individuals opposed to the Russian-backed government candidate. The report stated that some major international foundations funded the exit polls, which according to the incumbent leader were skewed. These foundations included The National Endowment for Democracy, which receives its money directly from Congress; the Eurasia Foundation, which receives money from the State Department, and the Renaissance Foundation, which receives money from the same billionaire financier as well as the US State Department. Since the State Department is involved, that implies that this funding is quite directly enmeshed in US foreign policy strategy. Other countries involved included Great Britain, the Netherlands, Switzerland, Canada, Norway, Sweden and Denmark. Also involved in funding certain groups and activities in the Ukraine was the International Republican Institute and the National Democratic Institute, which was chaired by former Secretary of States Madeline Albright at the time.[8] Mark Almond wrote for the Guardian in 2004 of the advent of People Power, describing it in relation to the situation that was then breaking in the Ukraine, and stated that, The upheaval in Ukraine is presented as a battle between the people and Soviet-era power structures. The role of western cold war-era agencies is taboo. Poke your nose into the funding of the lavish carnival in Kiev, and the shrieks of rage show that you have touched a neuralgic point of the New World Order. Almond elaborated: "Throughout the 1980s, in the build-up to 1989's velvet revolutions, a small army of volunteers - and, let's be frank, spies - co-operated to promote what became People Power. A network of interlocking foundations and charities mushroomed to organise the logistics of transferring millions of dollars to dissidents. The money came overwhelmingly from Nato states and covert allies such as "neutral" Sweden. [ ...] The hangover from People Power is shock therapy. Each successive crowd is sold a multimedia vision of Euro-Atlantic prosperity by western-funded "independent" media to get them on the streets. No one dwells on the mass unemployment, rampant insider dealing, growth of organised crime, prostitution and soaring death rates in successful People Power states.

As Almond delicately put it, People Power is, it turns out, more about closing things than creating an open society. It shuts factories but, worse still, minds. Its advocates demand a free market in everything - except opinion. The current ideology of New World Order ideologues, many of whom are renegade communists, is Market-Leninism - that combination of a dogmatic economic model with Machiavellian methods to grasp the levers of power.[9] As Mark MacKinnon reported for the Globe and Mail, Canada, too, supported the efforts of the youth activist group, Pora, in the Ukraine, providing funding for the people power democracy movement. As MacKinnon noted, The Bush administration was particularly keen to see a pro-Western figure as president to ensure control over a key pipeline running from Odessa on the Black Sea to Brody on the Polish border. However, The outgoing president, Leonid Kuchma, had recently reversed the flow so the pipeline carried Russian crude south instead of helping U.S. producers in the Caspian Sea region ship their product to Europe. As MacKinnon analyzes, the initial funding from western nations came from Canada, although this was eventually far surpassed in amount by the United States. Andrew Robinson, Canadas ambassador to Ukraine at the time, in 2004, began to organize secret monthly meetings of Western ambassadors, presiding over what he called "donor co-ordination" sessions among 28 countries interested in seeing Mr. Yushchenko succeed. Eventually, he acted as the group's spokesman and became a prominent critic of the Kuchma government's heavy-handed media control. Canada further invested in a controversial exit poll, carried out on election day by Ukraine's Razumkov Centre and other groups, that contradicted the official results showing Mr. Yanukovich had won. Once the new, pro-Western government was in, it announced its intention to reverse the flow of the Odessa-Brody pipeline.[10] Again, this follows the example of Georgia, where several US and NATO interests are met through the success of the colour revolution; simultaneously preventing Russian expansion and influence from spreading in the region as well as advancing US and NATO control and influence over the major resources and transport corridors of the region. Daniel Wolf wrote for the Guardian that, For most of the people gathered in Kiev's Independence Square, the demonstration felt spontaneous. They had every reason to want to stop the government candidate, Viktor Yanukovich, from coming to power, and they took the chance that was offered to them. But walking through the encampment last December, it was hard to ignore the evidence of meticulous preparation - the soup kitchens and tents for the demonstrators, the slickness of the concert, the professionalism of the TV coverage, the proliferation of the sickly orange logo wherever you looked. He elaborated, writing, the events in the

square were the result of careful, secret planning by Yushchenko's inner circle over a period of years. The true story of the orange revolution is far more interesting than the fable that has been widely accepted. Roman Bessmertny, Yushchenko's campaign manager, two years prior to the 2004 elections, put as many as 150,000 people through training courses, seminars, practical tuition conducted by legal and media specialists. Some attending these courses were members of election committees at local, regional and national level; others were election monitors, who were not only taught what to watch out for but given camcorders to record it on video. More than 10,000 cameras were distributed, with the aim of recording events at every third polling station. Ultimately, it was an intricately well-planned public relations media-savvy campaign, orchestrated through heavy financing. Hardly the sporadic people power notion applied to the peaceful coup in the western media.[11] The Tulip Revolution in Kyrgyzstan In 2005, Kyrgyzstan underwent its Tulip Revolution in which the incumbent was replaced by the pro-Western candidate through another popular revolution. As the New York Times reported in March of 2005, shortly before the March elections, an opposition newspaper ran photographs of a palatial home under construction for the country's deeply unpopular president, Askar Akayev, helping set off widespread outrage and a popular revolt. However, this newspaper was the recipient of United States government grants and was printed on an American government-financed printing press operated by Freedom House, an American organization that describes itself as a clear voice for democracy and freedom around the world. Moreover, other countries that have helped underwrite programs to develop democracy and civil society in Kyrgyzstan were Britain, the Netherlands and Norway. These countries collectively played a crucial role in preparing the ground for the popular uprising that swept opposition politicians to power. Money mostly flowed from the United States, in particular, through the National Endowment for Democracy (NED), as well as through the Freedom House printing press or Kyrgyz-language service of Radio Free Europe/Radio Liberty, a pro-democracy broadcaster. The National Democratic Institute also played a major financing role, for which one of the chief beneficiaries of their financial aid said, It would have been absolutely impossible for this to have happened without that help. The Times further reported that: "American money helps finance civil society centers around the country where activists and citizens can meet, receive training, read independent newspapers and even watch CNN

or surf the Internet in some. The N.D.I. [National Democratic Institute] alone operates 20 centers that provide news summaries in Russian, Kyrgyz and Uzbek. The United States sponsors the American University in Kyrgyzstan, whose stated mission is, in part, to promote the development of civil society, and pays for exchange programs that send students and non-governmental organization leaders to the United States. Kyrgyzstan's new prime minister, Kurmanbek Bakiyev, was one. All of that money and manpower gave the coalescing Kyrgyz opposition financing and moral support in recent years, as well as the infrastructure that allowed it to communicate its ideas to the Kyrgyz people." As for those who did not read Russian or have access to the newspaper listened to summaries of its articles on Kyrgyz-language Radio Azattyk, the local United States-government financed franchise of Radio Free Europe/Radio Liberty. Other independent media was paid for courtesy of the US State Department.[12] As the Wall Street Journal revealed prior to the elections, opposition groups, NGOs and independent media in Kyrgyzstan were getting financial assistance from Freedom House in the US, as well as the US Agency for International Development (USAID). The Journal reported that, To avoid provoking Russia and violating diplomatic norms, the U.S. can't directly back opposition political parties. But it underwrites a web of influential NGOs whose support of press freedom, the rule of law and clean elections almost inevitably pits them against the entrenched interests of the old autocratic regimes. As the Journal further reported, Kyrgyzstan occupies a strategic location. The U.S. and Russia both have military bases here. The country's five million citizens, mostly Muslim, are sandwiched in a tumultuous neighborhood among oil-rich Kazakhstan, whose regime tolerates little political dissent; dictatorial Uzbekistan, which has clamped down on foreign aid groups and destitute Tajikistan. In the country, a main opposition NGO, the Coalition for Democracy and Civil Rights, gets its funding from the National Democratic Institute for International Affairs, a Washington-based nonprofit funded by the U.S. government, and from USAID. Other agencies reported to be involved, either through funding or ideological-technical promotion (see: propaganda), are the National Endowment for Democracy (NED), the Albert Einstein Institute, Freedom House, and the US State Department. [13]

President Askar Akayev of Kyrgyzstan had referred to a third force gaining power in his country. The term was borrowed from one of the most prominent US think tanks, as third force is: "... which details how western-backed non-governmental organisations (NGOs) can promote regime and policy change all over the world. The formulaic repetition of a third "people power" revolution in the former Soviet Union in just over one year - after the similar events in Georgia in November 2003 and in Ukraine last Christmas - means that the post-Soviet space now resembles Central America in the 1970s and 1980s, when a series of US-backed coups consolidated that country's control over the western hemisphere." As the Guardian reported: "Many of the same US government operatives in Latin America have plied their trade in eastern Europe under George Bush, most notably Michael Kozak, former US ambassador to Belarus, who boasted in these pages in 2001 that he was doing in Belarus exactly what he had been doing in Nicaragua: "supporting democracy". Further: "The case of Freedom House is particularly arresting. Chaired by the former CIA director James Woolsey, Freedom House was a major sponsor of the orange revolution in Ukraine. It set up a printing press in Bishkek in November 2003, which prints 60 opposition journals. Although it is described as an "independent" press, the body that officially owns it is chaired by the bellicose Republican senator John McCain, while the former national security adviser Anthony Lake sits on the board. The US also supports opposition radio and TV."[14] So again, the same formula was followed in the Central Asian Republics of the former Soviet Union. This US foreign-policy strategy of promoting soft revolution is managed through a network of American and international NGOs and think tanks. It advances NATO and, in particular, US interests in the region. Conclusion The soft revolutions or colour revolutions are a key stratagem in the New World Order; advancing, through deceptions and manipulation, the key strategy of containing Russia and controlling key resources. This strategy is critical to understanding the imperialistic nature of the New

World Order, especially when it comes to identifying when this strategy is repeated; specifically in relation to the Iranian elections of 2009. Part 1 of this essay outlined the US-NATO imperial strategy for entering the New World Order, following the break-up of the Soviet Union in 1991. The primary aim was focused on encircling Russia and China and preventing the rise of a new superpower. The US was to act as the imperial hegemon, serving international financial interests in imposing the New World Order. Part 2 outlined the US imperial strategy of using colour revolutions to advance its interests in Central Asia and Eastern Europe, following along the overall policy outlined in Part 1, of containing Russia and China from expanding influence and gaining access to key natural resources. The third and final part to this essay analyzes the nature of the imperial strategy to construct a New World Order, focusing on the increasing conflicts in Afghanistan, Pakistan, Iran, Latin America, Eastern Europe and Africa; and the potential these conflicts have for starting a new world war with China and Russia. In particular, its focus is within the past few years, and emphasizes the increasing nature of conflict and war in the New World Order. Part 3 looks at the potential for A New World War for a New World Order. Endnotes
[1] Michael Dobbs, U.S. Advice Guided Milosevic Opposition. The Washington Post: December 11, 2000: http://www.washingtonpost.com/ac2/wp-dyn/A18395-2000Dec3? language=printer [2] Roger Cohen, Who Really Brought Down Milosevic? The New York Times: November 26, 2000: http://www.nytimes.com/2000/11/26/magazine/who-reallybrought-down-milosevic.html?sec=&spon=&pagewanted=1 [3] Mark MacKinnon, Georgia revolt carried mark of Soros. The Globe and Mail: November 23, 2003: http://www.markmackinnon.ca/dispatches_georgia3.html [4] Mark MacKinnon, Politics, pipelines converge in Georgia. The Globe and Mail: November 24, 2003: http://www.markmackinnon.ca/dispatches_georgia2.html [5] Ian Traynor, US campaign behind the turmoil in Kiev. The Guardian: November 26, 2004: http://www.guardian.co.uk/world/2004/nov/26/ukraine.usa [6] Jonathan Steele, Ukraine's postmodern coup d'etat. The Guardian: November 26, 2004: http://www.guardian.co.uk/world/2004/nov/26/ukraine.comment [7] John Laughland, The revolution televised. The Guardian: November 27, 2004: http://www.guardian.co.uk/media/2004/nov/27/pressandpublishing.comment

[8] Matt Kelley, U.S. money has helped opposition in Ukraine. Associated Press: December 11, 2004: http://www.signonsandiego.com/uniontrib/20041211/news_1n11usaid.html [9] Mark Almond, The price of People Power. The Guardian: December 7, 2004: http://www.guardian.co.uk/world/2004/dec/07/ukraine.comment [10] Mark MacKinnon, Agent orange: Our secret role in Ukraine. The Globe and Mail: April 14, 2007: http://www.markmackinnon.ca/dispatches_ukraine4.html [11] Daniel Wolf, A 21st century revolt. The Guardian: May 13, 2005: http://www.guardian.co.uk/world/2005/may/13/ukraine.features11 [12] Craig S. Smith, U.S. Helped to Prepare the Way for Kyrgyzstan's Uprising. The New York Times: March 30, 2005: http://query.nytimes.com/gst/fullpage.html? res=9806E4D9123FF933A05750C0A9639C8B63&sec=&spon=&pagewanted=all [13] Philip Shishkin, In Putin's Backyard, Democracy Stirs -- With U.S. Help. The Wall Street Journal: February 25, 2005: http://www.iri.org/newsarchive/2005/2005-02-25News-WSJ.asp [14] John Laughland, The mythology of people power. The Guardian: April 1, 2005: http://www.guardian.co.uk/world/2005/apr/01/usa.russia

Andrew Gavin Marshall is a Research Associate with the Centre for Research on Globalization (CRG). He is currently studying Political Economy and History at Simon Fraser University. Andrew Gavin Marshall is a frequent contributor to Global Research. Global Research Articles by Andrew Gavin Marshall